Key Changes to the Law
Following two consultations which took place earlier in the year in which holiday entitlement and
pay calculations were discussed, the Government has now published its response. This means that
they have now laid out the proposals for key changes to the law on holiday pay and working time
regulations which are set to come into force in early 2024.
The Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023
(“Regulations”) are expected to take effect from 1 January 2024, however, the changes in relation
to the accrual and payment of holiday pay for part-year and irregular workers only relate to leave
years which start on or after the 1 April 2024.
This follows from the ruling in the case of Harper Trust v Brazel where confusion arose from the
Supreme Court’s decision. The case had resulted in part-year workers receiving more holiday pay
than part-time workers who worked the same number of hours on an annual basis. The Government
launched the consultations as a way to address the disparity in holiday pay and entitlement.

Definitions

  • Part-Year Workers: “workers who only work for part of the year and are unpaid for the remainder of the year”
  • Part-time Workers:  “workers who work fewer hours than a full-time worker.”
  • Workers with Irregular Hours:  “workers who have a completely irregular, non-repeating work pattern.”
  • Holiday Entitlement:  “the 5.6 weeks of statutory paid holiday that workers are entitled to under the Working Time Regulations 1998. Holiday entitlement is also known as annual leave entitlement.” (Gov.UK, 2023).

What the Changes Will Mean to Existing Legislation

The main changes this will bring are:

  • Holiday accrual for part year and irregular workers only will be calculated at 12.07% of the
    workers normal pay based on the number of hours worked within the applicable pay period.
  • Regulations 13 and 13A of the Working Time Regulations will be removed from part-year and
    irregular employees. This will be replaced by a new Regulation (15B) in which annual leave will
    accrue at 12.07%.
  • The annual leave calculation for both part-year and irregular workers will be in hours instead
    of weeks.
  • Paying “rolled-up” holiday pay will be allowed for part-year and irregular workers.
  • Employers will no longer be required to keep records of their employees’ working time as long as
    they can show that they are compliant with the Working Time Regulations.
  • The two existing holiday entitlements (4 weeks and 1.6 weeks) will no longer be merged and will
    remain separate. A new provision will be inserted into the WTR by the Government to explain what additional elements should be taken into account in determining what a “week’s pay” when
    calculating holiday pay.
    Such elements are as follows:

    • payments, including commission payments, where those payments are intrinsically linked to the performance of tasks which a worker is contractually obliged to do.
    • payments for professional or personal status relating to length of service, seniority, or professional qualifications.
    • other payments, such as overtime payments, which have regularly been paid to a workers in the previous 52 weeks.
  • The new legislation will outline the following definitions of part-year and irregular
    workers:

    • Part-Year: “a worker is a part-year worker in relation to a leave year, if under the terms of
      their contract, they are required to work only part of that year and there are periods within that year (during the term of the contract) of at least a week which they are not required to work and for which they are not paid.”
    • Irregular: “a worker is an irregular hours worker, in relation to a leave year, if the number of paid hours that they will work in each pay period during the term of their contract in that year is, under the terms of their contract, wholly or mostly variable.” (FCSA, 2023).

The proposals may be a welcome change for those of you who employ part-year and irregular workers
as this may help to alleviate some of the administrative burdens from calculating holiday pay and
leave entitlement but if you are ever unsure, you know where we are.